The United Nations (U.N.) Convention against Corruption (the Convention) entered into force 14 December 2005. As of 10 February 2007, there were 140 states signatories and 84 ratifications/accessions to the Convention, with the United States (U.S.) ratifying it 30 October 2006.
In 2000 the U.N. General Assembly recognized the importance of an effective international legal tool to wield against corruption apart from that already established in the U.N. Convention against Transnational Organized Crime. An ad hoc committee was created to negotiate such a convention, which the General Assembly adopted 31 October 2003. The three stated purposes of the Convention are to: 1) promote and strengthen means to deter and fight corruption more efficiently and effectively; 2) champion, facilitate, and support international cooperation and technical assistance in preventing and fighting corruption, including asset recovery; and 3) promote integrity, accountability, and proper management of public affairs and property.
Chapter II of the Convention, Articles 5-14, provides critical components regarding preventatives measures. These include, but are not limited to: requiring state parties to develop and maintain anti-corruption policies promoting societal participation and reflecting rule of law principles; develop codes of conduct for public officials; adopt mechanisms to improve the hiring, retention, and promotion of civil servants based upon principles of efficiency, transparency, and objective criteria such as merit; take steps to prevent corruption and promote transparency in procurements; take measures to strengthen the integrity and prevent corruption among the judiciary; prevent corruption among the private sector; and take steps to promote the participation of civil society organizations and individuals in the fight against corruption.
Chapter III of the Convention, Articles 15-27 requires states parties to adopt legislation to criminalize a number of offenses including bribery of national public officials, bribery of foreign public officials and officials of public international organizations, trading in influence, abuse of functions, and bribery and embezzlement in the private sector.
Chapter IV of the Convention discusses international cooperation. Pursuant to the requirement of Article 46, paragraph 13 of the Convention, the United States has designated the Department of Justice, Criminal Division, Office of International Affairs, as the central authority for mutual legal assistance under the Convention. The central authority for states parties must receive requests for mutual legal assistance and either execute them or send them to the “competent authorities” for execution.
Chapter V of the Convention, Articles 51-59 treats asset recovery. Article 51 specifies that the return of assets is a fundamental principle of the Convention, and States parties must provide each other the greatest cooperation and assistance in this endeavor.
An ICSID tribunal held that a payment made to former Kenyan President arap Moi to obtain a contract was a bribe, and thus rendered the agreement a voidable one, that ICSID would not enforce.
The case arose out of a contract entered into between Kenya and a company called “the House of Perfume,” in April 1989 to build, maintain, and run duty-free shops at Nairobi and Mombassa airports. In May 1990 the agreement was amended to substitute World Duty Free Company Limited (WDF”) for the House of Perfume. WDF filed a request for arbitration with ICSID against the Republic of Kenya (“Kenya”) on June 19, 2000 contending that Kenya breached the contract, illegally expropriated its property, and violated its contractual rights. Kenya argued that the 1989 contract was obtained by bribing former President Daniel arap Moi, that this was a criminal act, and the contract is therefore voidable, has been legally avoided by Kenya, and WDF’s claims must be dismissed with prejudice.
The ICSID panel noted that the proceedings had been “unusually lengthy” and both parties bore some responsibility for the circumstances. It considered whether there had been a bribe, and the impact of this upon the agreement. Mr. Nasir Ibrahim Ali, former Chief Executive Officer and Shareholder of House of Perfume, informed the tribunal that in 1989 he made a cash “personal donation” to His Excellency Daniel arap Moi (HEDAM) worth $500,000 U.S. which, Mr. Ali stated, he believed was part of the cost of doing business in Kenya. Kenya did not deny that the payment had been made to HEDAM. The tribunal held that under these circumstances, the payment Mr. Ali made should be viewed as a bribe to conclude the 1989 contract.
Regarding Kenya’s claim, that, as a matter of international public policy, as well as pursuant to Kenyan and English law, the 1989 agreement “does not have the force of law,” and WDF’s claims must be dismissed, the arbitral tribunal discussed a series of cases which either concluded that corruption had not been established and applied the contract, or that corruption had been proven and refused to apply the contract on grounds of international or transnational public policy. The tribunal held that bribery is contrary to transnational public policy and claims based upon contracts obtained through corruption cannot be upheld. In its decision, the tribunal noted that to grant the claimant his relief would appear to encourage his illegal conduct. It did note that it was troubled by the fact that Kenya used its former President’s corrupt receipt of the bribe as a complete defense to the claims, and that it was troubled by the fact that Kenya had not tried to prosecute the former President for corruption or to recover the bribe.
International Court of Justice: Pulp Mills on the River Uruguay (Argentina v. Uruguay) (23 January 2007)
Click Click here for document. (Approximately 18 pages).
In an order issued 23 January 2007, the International Court of Justice (ICJ) held, by a vote of 14 to 1, that the current circumstances do not warrant it to exercise its powers of provisional measures pursuant to Article 41 of the Court’s statute. Judges Burgenthal and Koroma issued separate declarations, while Judge ad hoc Torres Bernardez issued a dissent (in French).
In May 2006 Argentina filed an application against Uruguay regarding alleged violations of the Statute of the River Uruguay, a treaty both nations signed on 26 February 1975 (the 1975 Statute). Argentina asserted that Uruguay violated the treaty by building two pulp mills on the River Uruguay without first notifying and consulting with Argentina, as the 1975 Statute required. Argentina argued further that the pulp mills endangered the river and its surrounding areas. As authority for seeking the Court’s jurisdiction to hear the dispute Argentina cited Article 60, paragraph 1, of the 1975 Statute requiring either party to submit a dispute regarding interpretation of the 1975 Statute to the ICJ. In addition to its application, Argentina requested the ICJ to apply provisional measures to Uruguay, including suspending approval of the building and their construction pending a final decision from the Court. The ICJ issued an order 13 July 2006 (45 International Legal Materials 1025) in which the Court refused to exercise its powers of provisional measures. Uruguay subsequently submitted a request for provisional measures to the Court on 29 November 2006 because organized groups of Argentine citizens had blockaded an important international bridge over the river, causing Uruguay economic damage, and because Argentina had failed to take steps to stop the blockade. Uruguay requested the Court to order Argentina to take all “reasonable and appropriate steps” to stop the blockage of bridges and roads between the two nations, and to require Argentina not to escalate the dispute, or prejudice Uruguay’s rights before the ICJ.
The ICJ held hearings on the dispute 18 and 19 December 2006 in which Argentina contested the jurisdiction of the Court to provide the provisional measures that Uruguay had requested because, Argentina argued, those measures lacked a link with the 1975 Statute. By contrast, Uruguay contended that the blockade directly related to the subject-matter of the case and the court possessed jurisdiction over it.
In the reasoning of its January 2007 order, the Court recalled its July 2006 order in which it held that it possessed prima facie jurisdiction to dispose of the merits of the case. It finds that it holds jurisdiction to hear Uruguay’s claims because there is a sufficient nexus between those and the original ones articulated by Argentina. It discusses that the goal of its provisional measures power is to preserve the parties’ rights pending the final decision, as long as there is an urgent need to prevent irreparable prejudice to such rights. The Court emphasizes that the construction on the pulp mills has progressed significantly since the summer despite the blockades, and it is not convinced that the blockades pose a risk of irreparably damaging Uruguay’s rights. Even if there is a danger to Uruguay’s rights, it is not an imminent one. It further opines that the blockades do not warrant the other two provisional measures that Uruguay requested. The Court then encourages the parties to fulfill their obligations under international law, and implement in good faith the consultation and cooperation measures in the 1975 Statute, and not take any action that would further exacerbate the dispute.
European Court of Justice Grand Chamber: Cipolla v. Fazari (5 December 2006)
Click here for document. (Approximately 10 pages).
At issue before the European Court of Justice (ECJ) was whether Articles 10, 81, and 82 of the European Community Treaty (EC) preclude a Member State from adopting a law or regulation which approves, on the basis of a draft that a professional group of lawyers produced (such as the Consiglio Cazionale Forense (CNF)-National Lawyer’s Council) a scale setting the minimum and maximum fees for lawyer services from which there is generally no derogation. The ECJ held that Articles 10, 81, and 82 EC do not preclude a Member State from adopting such legislation; in part because in exceptional circumstances a departure may be made from the fee scales. The ECJ also examined whether Member State legislation that absolutely prohibits derogation from minimum fees for court services for lawyers, by agreement between the parties, constitutes a restriction of freedom to provide services enunciated in EC Article 49. Article 49 requires the elimination of restrictions that may prohibit the activities of a provider of services in another Member State. The ECJ held that an absolute prohibition on derogation from minimum fees violates Article 49 and constitutes a restriction on freedom of services. It referred to the Italian court the issue whether the application of the legislation strikes an appropriate balance between protection of consumers of legal services and the administration of justice.
The case arose out of two joined cases, one an expropriation of land dispute, and the other a case involving out-of court legal services. In the first case, Mrs. Fazari appointed an attorney, Frederico Cipolla, to bring suit against the town of Moncalieri, for emergency occupation of land without an expropriation order. The dispute was settled apparently without Mr. Cipolla’s involvement. Mr. Cipolla did however, receive payment from other parties in the land dispute. Mr. Cipolla subsequently billed Mrs. Fazari for his services and she refused to pay. An Italian law, (the Royal Decree Law) provides that the Italian National Lawyer’s Council (CNF) set the fees and expenses paid to lawyers every two years, and this scale must subsequently be approved in Italian legislation. Another Italian law, Number 794, Article 24, precludes derogation from the minimum scale of fees, and any agreement otherwise is void. Mr. Cipolla brought suit in the Tribunale di Torino, which took judicial notice of the amount he received from the other parties. Cipolloa appealed, seeking application of the lawyer’s fee scale. The appeals court, Corte d’appello di Torino, decided to stay the suit and refer the case to the ECJ. The appeals court framed the issues as being whether the principle of competition in Community law in Articles 10, 81, and 82 EC, also apply to legal services, and whether that principle also apply to the fee for lawyers to be agreed to by the parties? It also urged the ECJ to consider whether that principle precludes an absolute derogation from lawyer’s fees, and whether the free movement of services in Articles 10 and 49 EC apply to the provision of legal services?
In the second suit, a lawyer, Mr. Meloni, sought and obtained an order that he be paid for certain out-of-court copyright work that he performed for two clients. His clients objected to the amount of the fees and argued that they were excessive in light of the amount of the work performed for out-of-court services. The Tribunale di Roma stayed the proceedings and referred to the ECJ the issue whether Article 10 and 81 of the EC preclude a Member State from adopting by law or regulation a scale setting fees for lawyers for work outside of court that could be performed by others.
Mr. Cipolla argued that the questions referred by the national court, in particular with reference to an agreement between the parties, was inadmissible as hypothetical. The ECJ dismissed this argument however, noting that questions on the interpretation of Community law referred by a national court is presumptively relevant. In its reasoning the ECJ discussed that settled case law holds that Member States may not introduce or maintain measures that make EC competition rules ineffective.
United States: Islamic American Relief Agency (IARA-USA) v. Gonzales (D.C. Cir. Feb. 13, 2007)
Click here for document. (Approximately 18 pages).
The case was the first in the District of Columbia Court of Appeals challenging the designation of an entity as a Specially Designated Global Terrorist (SGDT) based on a branch relationship with a group that supports terrorists, though it has heard other cases involving groups that provided direct support to terrorists.
The Islamic American Relief Agency (IARA-USA) was founded in 1985 by a Sudanese immigrant and has conducted humanitarian work around the world. It is the branch organization of one in Sudan called the Islamic African Relief Agency (IARA). The United States (U.S.) Department of the Treasury, Office of Foreign Assets Control (OFAC) designated IARA as a SGDT on October 13, 2004 because OFAC concluded that it provided support to persons who commit, threaten to commit, or support terrorism in violation of anti-terrorism laws. OFAC deemed IARA-USA to be a branch of IARA. The ramification of this conclusion was that IARA-USA could not transfer, withdraw, export, pay, or otherwise manage, its financial assets and property without prior approval from OFAC. IARA-USA could not receive financial contributions, goods, or services, use its offices, or remove any of its corporate property. IARA-USA challenged the blocking order alleging that it is a separate entity from IARA and the blocking order violates the Administrative Procedures Act, the International Emergency Economic Powers Act, its rights to equal protection, free exercise of religion and free association. It argued further that it should be permitted to pay attorney’s fees from the blocked funds. The district court granted summary judgment for the defendants the Attorney General, the Secretary of Treasury, and other FBI agents and Treasury personnel on all of the claims. IARA-USA appealed, contending that the district court erred. The United States Court of Appeals for the District of Columbia Circuit affirmed the district court’s decision in all respects except that regarding IARA USA’s motion for leave to amend its complaint to address the issue of payment of attorney’s fees. It remanded that issue to the district court for further proceedings.
In its analysis, the Court of Appeals examined whether the record supported OFAC’s conclusion that IARA-USA is a branch of IARA. It noted that because OFAC’s designation of IARA-USA as a SGDT falls within the Administrative Procedures Act (APA), the APA’s “highly deferential” standard of review applies. Under that standard, OFAC’s designation may only be set aside if it is arbitrary, capricious, an abuse of discretion, or otherwise not in accord with law 5 U.S.C. §706(2)(A). The Court accepted the government’s argument that IARA-USA and IARA constituted a single global organization, and the district court’s conclusion that the record contained “substantial evidence” to support OFAC’s determination that IARA-USA is related and connected to IARA. The Court of Appeals emphasized, that at the time of its inception, IARA-USA viewed itself as a branch of IARA. The Court disposed of IARA-USA’s Constitutional arguments by relying on precedent Holy Land Found. For Relief & Dev. V. Ashcroft, 333 F.3d 156 (D.C. Cir. 2003). As it had earlier in Holy Land, the Court of Appeals opined that “there is no Constitutional Right to facilitate terrorism.” While IARA-USA argued that its equal protection rights were violated because it was treated differently than UNICEF, which had entered into a contract to provide IARA funding, the court rejected that argument because UNICEF and IARA-USA are not “similarly situated” because UNICEF had only a single contact with IARA. Rejecting IARA-USA’s free association argument, the court emphasized that the blocking was not based upon IARA-USA’s associational work other than financial activity that was directed at the financing of terrorists.
United States: Simpson v. Socialist People’s Libyan Arab Jamahiriya (D.C. Cir. November 21, 2006)
Click here for document. (Approximately 12 pages long).
The Court of Appeals held that because the definition of “hostage taking” in the Foreign Sovereign Immunities Act (FSIA) 28 U.S.C. §1605(e)(2) focuses on the state of mind of the hostage taker, a plaintiff does not have to demonstrate that the hostage taker issued a demand showing his intended purposes to a third party. The court therefore denied Libya’s motion to dismiss on foreign sovereign immunity grounds.
Sandra Simpson, an American citizen, and her husband, Dr. Mostafa Karim, a permanent American citizen of Egyptian birth, were on board the Carin II, a private yacht, sailing in the Mediterranean in February 1987. A sudden storm forced the ship off its course. Libyan harbor authorities responded to the Carin II’s distress signal and permitted it to dock in Benghazi. After the Carin docked, Libyan officials boarded the yacht, made the passengers disembark, and threatened to shoot them if they tried to leave. After holding them for three months, the Libyan authorities permitted Ms. Simpson to flee to Zurich. They continued holding Dr. Karim in solitary confinement and unsanitary conditions without proper food or medical equipment until November 1987. He died of cancer in 1993.
Ms. Simpson and her husband’s estate sued Libya alleging torture, hostage-taking, battery, false imprisonment, intentional infliction of emotional distress, and sought compensatory damages. Libya moved to dismiss based on lack of subject matter jurisdiction because Ms. Simpson’s offer to arbitrate the case failed to satisfy the FSIA jurisdictional requirements; lack of personal jurisdiction; and failure to state a claim for torture and hostage taking. The district court denied the motion. See Simpson v. Socialist People’s Libyan Arab Jamahiriya, 180 F. Supp.2d 78 (D.D.C. 2001). On appeal, the court of appeals held that Ms. Simpson’s offer to arbitrate satisfied the jurisdictional requirements of FSIA at 28 U.S.C. §1605(a)(7)(B)(I) but reversed as to the torture claim for insufficient allegations of severity, and vacated and remanded on the hostage-taking claim. This permitted the plaintiffs to amend their complaint to allege facts to support their assertion that Libya intended to force action or inaction by a third party as a condition of releasing Ms. Simpson and her husband. The plaintiffs asserted three possible reasons why Libya held Ms. Simpson and Dr. Karim: 1) Libya wanted the U.S. to stop conducting air raids against it and thought it would do so in exchange for the prisoners; 2) as retaliation against earlier U.S. air raids; and 3) to force Egypt to return military resources to Libya.
In its analysis the court of appeals discussed the “terrorism exception” to FSIA, which permits U.S. courts to pierce the sovereign immunity of nations in cases where monetary damages are sought against a foreign nation for personal injury or death that was caused by an act of hostage taking. 28 U.S.C. §1605(a)(7). The hostage exception to FSIA applies only when three additional prongs have been met: 1) the foreign state was designated as a “state-sponsor” of terrorism; 2) it was provided a reasonable opportunity to arbitrate the claim; and 3) the claimant or victim was a citizen of the U.S. 28 U.S.C. §1605(a)(7)(A), (B). The court found these elements to have been satisfied. Libya argued that third-party awareness of a hostage-taker’s intent must be pled and supported by evidence. The court rejected Libya’s assertion as unsupported by case law or the statutory definition of “hostage-taking,” and held that plaintiffs suing under the FSIA Terrorism Exception need only assert a quid pro quo as the hostage-taker’s intended result.
United States: Af-Cap Inc. v. Chevron (9th Cir. January 25, 2007)
Click here for document. (Approximately 25 pages).
Af-Cap Inc. appealed a district court ruling dissolving and vacating garnishments and liens filed against property of the Republic of Congo held by Chevron Texaco Corporation (CT Corp) and domestic Chevron Texaco subsidiaries (Chevron Texaco) and dismissing Af-Cap’s writ of execution against Congo and Chevron Texaco. The court of appeals affirmed the dismissal because taxes, bonuses, and royalties owed to the Congo for extraction of oil and other natural resources were not “used for a commercial activity” in the United States (U.S.) and are therefore protected under the Foreign Sovereign Immunity Act (FSIA) 28 U.S.C. §1610(a).
In December 1984 Equator Bank (Af-Cap’s predecessor) loaned $6.5 million dollars to the Congo to build a highway in exchange for which the Congo agreed to “execution against any property whatsoever,” and the Congo agreed to waive its sovereign immunity from suit, execution or attachment. In 1985 the Congo defaulted on the loan. Af-Cap brought a creditor’s suit against the Congo and six Chevron corporations and identified intangible obligations that Congo owned. The district court held that none of the Chevron Texaco obligations was property that the Congo used in a commercial activity in the U.S., and therefore could not be subject to execution under FSIA §1610(a).
As a preliminary matter the court of appeals opined that Congo’s 1984 waiver triggers the “commercial activity” exception to FSIA, without which, its property would be immune from attachment pursuant to 28 U.S.C. §1609. The court of appeals next proceeded to analyze whether the property was used for a “commercial activity” in the United States. The parties contested the meaning of “used for” in §1610(a) and the court noted that the issue was one of first impression for it. The court adopted the way in which the Fifth Circuit defined the term in Connecticut Bank of Commerce v. Republic of Congo, 309 F.3d 240 (5th Cir. 2002), when it held that “used for” means that the property is put into action, put into service, availed or employed for a commercial activity. The Ninth Circuit held that the obligations that Af-Cap identified were not property of the Congo “used for commercial activity in the United States” pursuant to this definition, and were therefore not subject to execution or collection under §1610(a) of FSIA.
Council of Europe Parliamentary Assembly Committee on Legal Affairs and Human Rights Report: The United States of America and International Law, Rapporteur: Mr. Tony Lloyd (8 February 2007)
Click here for document. (Approximately 20 pages).
While the report of Rapporteur Tony Lloyd to the Council of Europe Committee on Legal Affairs and Human Rights emphasizes the shared common values of the United States (U.S.) and Europe to promote the common goals of strengthening human rights and the rule of law, and lauds the case law of the United States Supreme Court, particularly the recent Hamdan decision, it condemns other recent U.S. Bush Administration activities in the area of international law. In particular, the report criticizes the Bush Administration since September 11, 2001 in the “war on terror” in four areas: 1) continuing to detain persons in Guantanamo Bay Cuba and elsewhere; 2) maintaining a network of secret detentions and interstate transfers, often in collaboration with nations known for using torture; 3) negotiating bilateral immunity agreements with states parties and non-states parties to the International Criminal Court; and 4) failing to make efforts to abolish the death penalty.
The report states: “a]lthough the United States of America (US), an observer to the Council of Europe, remains strongly committed to international law, the American administration has, especially since 11 September 2001 and in pursuit of its so-called ‘war on terror,’ inappropriately and unilaterally disregarded key human rights and humanitarian legal norms considered by it to be overly constraining or otherwise inappropriate in view of the new situation. In so doing, it has done a disservice to the cause of justice and rule of law and has tarnished its reputation as a beacon in defending human rights and in upholding well-established rules of international law.”
The report proposes a draft recommendation for the Assembly of Ministers to send a Resolution to the Government of the U.S., reminding it of its obligations as an observer state to the Council of Europe, to respect human rights and the rule of law pursuant to the Committee of Ministers Statutory Resolution (93) 26; to ask the U.S. to report to Assembly Resolutions 1340 (2003), 1443 (2205); 1507 (2006), and Assembly Recommendation 1760 (2006), with particular reference to the lawfulness of the detentions of those held at Guantanamo Bay, and secret detentions and transfers, as well as abolition of the death penalty.
The report notes the willingness of the Assembly to enter into discussions with the U.S. Congress, as well as with states on these issues.
Council of Europe Parliamentary Assembly Report: Member States’ Duty to Co-operate with the European Court of Human Rights, Rapporteur Mr. Christos Pourgourides (9 February 2007)
Click here for document. (Approximately 35 pages).
All states parties to the European Convention on Human Rights (the Convention) have committed not to impede the ability of individuals to exercise their right to apply to the European Court of Human Rights (ECHR) pursuant to Article 34 of the Convention. The report expresses its concern that in a number of cases involving the alleged killing, disappearance, beating, or threatening of applicants commencing cases before the ECHR, the authorities of member states have failed to effectively and fully investigate. Rather, in numerous cases, authorities have exhibited a reluctance to look into the alleged crimes, and attempts have even been made to cover them up. The report cites specific examples of cases involving applicants from the Northern Caucasus Region of the Russian Federation, Moldova, Azerbaijan, and Turkey.
The report further cites a concern that lawyers and non-governmental organizations assisting applicants before the ECHR, and those who help applicants in human rights cases to exhaust domestic remedies, have also been subjected to improper pressure including trumped-up criminal charges, discriminatory tax charges, and threats of prosecution for “abuse of office.” The report therefore calls for member states to cooperate fully with the ECHR and to stop acts of intimidation against applicants and their attorneys. Member states are urged to take “robust action” to prosecute and penalize perpetrators and instigators of these acts, to communicate the message that authorities will not stand for such abuses.
The report urges the ECHR to act assertively to counteract such pressure on applicants and their attorneys, by, for example, the use of interim measures pursuant to Article 39 of the Rules of the Court, and giving certain cases priority. The report lauds the Court for finding interim measures to be binding upon states parties. The report recommends that the Court examine the practice of the Inter-American Court and Commission on Human Rights, which have applied interim measures to enjoin the authorities to provide applicants with special police protection to protect them from non-state actors. To counteract the lack of cooperation by member states in establishing the factual circumstances of the cases, the report proposes a number of measures including increased use of factual inferences and the reversal of the burden of proof. The report includes a draft resolution that urges the ECHR to among other things, apply with “considerable flexibility,” or even to waive, the requirement of exhaustion of domestic remedies for applicants from the North Caucasus region (including the Chechen and Ingush Republics, Dagestan, and North Ossetia) until substantial progress has been made to establish the rule of law in the region. The resolution would encourage the ECHR to use presumptions of fact and reverse the burden of proof in appropriate instances where there has been prima facie evidence of undue pressure being exerted on applicants or their attorneys.
American Society of International Law (ASIL) Annual Meeting March 28-31, 2007.
With a century of tradition and experience behind it, ASIL's Annual Meeting has become the most important gathering in the field of international law. ASIL's 101st Annual Meeting, "The Future of International Law," will take place at the Fairmont Hotel, March 28-30, 2007, in Washington, DC. For details visit http://www.asil.org/events/am07/.
ILIB is a free-of-charge electronic resource. To sign up for ILIB or ASIL Insights, click here.
To comment on this publication, send an e-mail message to Susan A. Notar, Esq., ILM Managing Editor at email@example.com